Markets rise on hope of virus slowing
TORONTO • North American stock markets surged to start the trading week on hopes of slowing growth of COVID-19 in parts of Europe and New York.
Canada’s main stock index benefited from gold prices briefly exceeding US$ 1,700 per ounce and hitting their highest level in seven years, which helped to offset a drop in crude oil prices.
The S& P/ TSX composite index closed up 654.40 points or 5.1 per cent to 13,592.70. That’s the highest level in about three weeks.
In New York, the Dow Jones industrial average was up 1,627.46 points or 7.7 per cent to 22,679.99. The S& P 500 was up 175.03 points at 2,663.68, and the Nasdaq was up 540.15 points at 7,913.24.
“Today’s reaction is really predicated on the fact that we started to see some very, what I’ll call, small glimmers of hope in making progress against the global spread of the virus over the weekend,” Craig Fehr, investment strategist at Edward Jones.
New coronavirus infections and deaths are showing signs of slowing in Italy and Spain. In New York — the financial capital of the U. S. and epicentre of infections — the number of daily deaths has been effectively flat for two days.
Fehr said he doubted days like Monday would be repeated without down days in between.
Still, he said signs of improvement show the virus has a finite shelf life. Fehr said markets have largely come to grips with the fact economic data are going to be “incredibly negative” for the end of the first quarter and much of the second quarter.
“But a day like today reflects the fact that there is some optimism that it won’t be quite as heavy or quite as persistent perhaps into the second half of the year,” he said in an interview.
New reported cases in China and re-closing of movie theatres should remind people about the probability of the virus flaring back up in the fall as hot temperatures subside, Fehr said.
Some of the market volatility is attributable to the potential for the virus to spread again after the economy is slowly reopened.
The Canadian dollar traded for US70.79 cents compared with an average of 70.71 cents on Friday.
All 11 major sectors of the TSX traded higher, led by consumer discretionary, utilities and health care.
The energy sector was the weakest performer on the day, still gaining nearly three per cent, despite a drop in crude oil prices. MEG Energy Corp. rose almost 20 per cent and Cenovus Energy Inc. 10 per cent.
The May crude contract was down US$ 2.76 at US$26.08 per barrel and the May natural gas contract was up 11 cents at US$ 1.73 per MMBTU.
Crude fell 9.6 per cent, following last week’s large gains, as a meeting Monday by OPEC and Russia was delayed until Thursday to reach an agreement to cut up to 15 million barrels of output per day.